Download your Simple Plan to take Charge of Your Cash Flow

(This is a guest post written by my son Fionn, sharing his thoughts on working to save up money for a big purchase)

Why I want a new scooter

I want a new scooter because my old Razor scooter Handel bars locked to the left when I crashed.

I also want a new scooter because my razor was lower to the ground and scrapes against the concrete. Park scooters are higher
off the ground and don’t scrape the concrete.

How much it cost and why I want a expensive scooter

It costs $200 I want an expensive scooter instead of a cheap one because cheap ones aren’t usually park scooters. There mostly have bigger wheels to bump over stuff. They also come with replacement parts.

Arrangement with mom and dad

The arrangement with my parents is simple I got 3 choices 1# not get one 2#Pay with my bank account 3# do work

I chose do work because I want a scooter and I want to save up for something else in the future. Working will probably help my work career too. Some of the chores you could say a few are Shoveling the snow, mowing the lawn, making my bed every day and loading the dishwasher.[Read more…]

Starting your own business and leaving the “safety” of a regular monthly paycheque behind is a big step filled with excitement, uncertainty, freedom, and fear.

The early days of any startup can be filled with what feel like endless challenges as you try to develop a minimal viable product or service, build avatars, find customers, and gain visibility through marketing, all while trying to cover your business expenses, pay yourself, and not sacrifice your life.

Here are four steps you can follow to get started with your new business on a solid money foundation:

1. Calculate your personal survival budget

Once you quit your job and start your business, your job income will fall to zero, and your business is going to need to provide. However, growing your startup and generating regular monthly income takes time. To support yourself (and your family if you have one) in the early stages of startup you need to:

– calculate your minimum monthly expenses.
– calculate your total minimum yearly expenses.
– divide your yearly expense total by 12 to turn these yearly expenses into monthly expenses.
– Add all of these expenses together. This is the amount of money you are going to need, each month, to feed yourself, keep the lights on, have at least a bit of fun, and survive without going into debt.

When you complete this calculation, and you have your survival budget, you may surprise yourself on exactly how little you can survive on each month. If you make more than this number during a given month, you can spend more (or save it for later), but knowing what your absolute minimum monthly budget is, and following this budget, will help you give your startup more time to grow and start providing an income.

Ashlea, Fionn, and I have a regular monthly budget of about $7500. Our survival budget is just under $2500. If the business has a bad month or two, we know we can make adjustments and live on less, giving my business the time it needs to become successful.[Read more…]

Dealing with the challenge of tight cash flow in your business is stressful and can result in an emotional roller coaster as you try to figure out how to make ends meet.

The best solution to dealing with up and down cash flow in your business is to prepare for this income roller coaster ahead of time. The top ten steps I suggest you take to prepare for these low income, tight cash flow months are:

1. Set aside 10% of all business income for making decisions: I call this a ‘Choice Account’. Every time your business gets paid, set 10% of that income into a separate account. Wait 30 days (longer if you don’t have a pressing need for the money). After 30 days set aside time in your busy schedule to sit and review your business and personal expenses, and make decisions about how you can most effectively use this 10%. By waiting 30 days to spend this money (and any savings you have kept in your Choice Account) you will be able to make different decisions about spending than you will during daily business operations (especially if you are panicking about cash flow challenges).

2. Maintain a clear boundary between your business and personal life: open separate bank accounts for your business. If you can, set up separate credit cards or lines of credit for your business. Keep business expenses on the business side, and personal expenses on the personal side. When your business receives money, run that money through the business bank accounts, then pay yourself. Use the money you paid yourself to cover personal expenses. If you ever loan money to your business, write up a loan document and transfer that money officially, then make sure you pay it back.[Read more…]